A company has inventory with a historical cost of \$50,000. At year-end, the replacement cost is \$44,000, the net realizable value is \$46,000, and the net realizable value less a normal profit margin is \$42,000. What is the amount of the lower-of-cost-or-market (LCM) write-down that should be recognized?

Step 1: Understand the lower-of-cost-or-market (LCM) rule. This accounting principle requires inventory to be reported at the lower of its historical cost or market value. Market value is determined as the middle value among replacement cost, net realizable value (NRV), and net realizable value less a normal profit margin.